In this BDC Working Paper, Dave Anderson, PhD and Pam Nicholson, MBA analyze the strategic issues health systems need to address to successfully adapt their strategies for the COVID Era environment.
The paper provides a check list for strategic response and recommends that health systems carefully assess their strategic position and organizational cultures in light of four major trends that will outlast the pandemic. These include:
Utilization changes caused by the acceleration of virtual care, the transition from inpatient to ambulatory care, and increases in at-home care
Market structure changes resulting from further consolidation of health systems and physician practices, greater medical group specialization, non-traditional market entrants such as Walmart and equity-backed primary care firms, and reinvigorated efforts to take and manage medical risk.
Operational changes, including more ICU and “swing” beds, a shift back to reusables, larger supply inventories, less on-site waiting, and more work from home.
Greater financial pressures driven by a 20% to 35% likely margin reduction in 2020 and acceleration of the long-term shift from commercial to government payer mix.
Many of these disruptive factors will require new strategies. Health systems must launch strategic reviews to determine how they need to adapt their organizations for the future. At the same time, health systems should assess their organizational cultures to determine whether they inspire action or produce paralysis. The paper includes a checklist of questions health system leaders should be asking to point them toward effective COVID Era strategies.
David G. Anderson, PhD
Senior Advisor
Boston and San Francisco 925-352-9462 dave.anderson@bdcadvisors.com
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